Micron Technology(US:MU)2025-09-23 23:02Financial Data and Key Metrics Changes - The company reported a gross margin above 50%, the highest since mid-fiscal 2022, with DRAM margins also higher than that period [42][43][44] - The operating margin is the highest since November 2018, indicating improved market conditions and pricing [42][43] Business Line Data and Key Metrics Changes - The NAND business is improving, with a focus on higher-value SSD products, although it remains below 2022 levels [42][43] - The company is transitioning from $13.8 billion in net CAPEX in 2025 to approximately $18 billion in 2026, primarily for DRAM construction and equipment [12][13] Market Data and Key Metrics Changes - The demand for NAND SSDs in servers and data centers is expected to increase significantly in calendar 2026, driven by large hyperscalers needing more storage for AI deployments [8][9] - The DRAM market is currently tight, with expectations for further tightening due to robust demand and limited supply growth [40][42] Company Strategy and Development Direction - The company is focusing on the data center market, having exited the managed NAND segment to concentrate resources on higher ROI areas [11][86] - The strategy includes leveraging new product announcements and maintaining a strong competitive position in the data center SSD market [9][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the NAND industry's improvement, particularly with the expected increase in demand from AI server deployments [8][9] - The company anticipates that the HBM business will have a higher ROI compared to non-HBM DRAM, with expectations of increased market share in HBM by 2026 [17][20] Other Important Information - The company is ramping up one-gamma DRAM production, which is expected to be the primary source of bit growth for fiscal 2026 [47] - The company is also preparing for the introduction of high-capacity SSDs, with average capacities expected to escalate rapidly [55] Q&A Session Summary Question: State of the NAND industry and pricing expectations - Management indicated that bits down in the current quarter are noise based on segment mix, and they expect demand from hyperscalers to drive improvements in the NAND industry [8][9] Question: HBM market share aspirations - The company expects to gain higher market share in HBM compared to previous years, with a focus on ROI and disciplined investments [17][20] Question: CAPEX guidance and spending allocation - The majority of the increased CAPEX is directed towards DRAM construction and equipment, with limited additional NAND spending [12][13] Question: DRAM and HBM gross margins - Management noted that HBM margins are expected to remain higher than non-HBM DRAM, with stable ROI from long-term contracts [19][20] Question: Long-term agreements with clients - There is interest in long-term agreements, but the company is being cautious due to market dynamics and potential tariff impacts [83][84] Question: Impact of exiting managed NAND on DRAM sales - The company maintains strong relationships with smartphone customers, ensuring that exiting managed NAND does not negatively impact DRAM sales [89]